North Baja Pipeline, LLC

Original Volume No. 1

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Effective Date: 08/12/2002, Docket: RP02-363-000, Status: Effective

Original Sheet No. 21 Original Sheet No. 21 : Effective

RATE SCHEDULE ITS-1

INTERRUPTIBLE TRANSPORTATION SERVICE

(Continued)

3. RATES (Continued)

3.2 Applicability of Surcharges

Shipper shall pay all surcharges applicable to the service

provided to Shipper as set forth in NBP's FERC Gas Tariff. Such

surcharges shall be deemed to be part of Shipper's Commodity

Charge.

3.3 Discounts

Shipper shall pay the Maximum Commodity Rate for service under

this rate schedule unless NBP offers to discount its rate to

Shipper under this rate schedule. If NBP elects to discount its

rate, NBP shall advise Shipper of the effective date of such

charge and the quantity of gas so affected, provided, however,

such discount shall not be anti-competitive or unduly

discriminatory between individual Shippers. The rate for service

under this rate schedule shall not be discounted below the Minimum

Commodity Rate set forth on the Statement of Effective Rates and

Charges for Transportation of Natural Gas.

3.4 Negotiated Rates

Notwithstanding any provision of NBP's Tariff to the contrary, NBP

and Shipper may mutually agree in writing to a Negotiated Rate

(including a Negotiated Rate Formula) with respect to the rates,

rate components, charges, or credits that are otherwise

prescribed, required, established, or imposed by this Rate

Schedule or by any other applicable provision of NBP's Tariff.

Such Negotiated Rate shall be set forth in Attachment B to the

Interruptible Transportation Service Agreement and NBP shall make

any filings with the Commission necessary to effectuate such

Negotiated Rate.

Shippers paying a Negotiated Rate which exceeds the maximum

applicable tariff rate shall be considered to be paying the

maximum applicable tariff rate for purposes of scheduling,

curtailment, and interruption, and calculating the economic value

of a request for available or unsubscribed capacity.

(Continued)